The Flawed Economics of Green Energy

For all the rhetoric on both sides of the green energy debate, one point that both sides can agree on is that an energy source is only viable if it produces more energy than it consumes.

To take a far-fetched example, if a new type of power plant could convert sand into electricity, it would appear on the surface to be a miraculous solution to the world’s energy needs. If, however, the process required the equivalent of 10 kilowatt-hours of fossil fuels to power the plant, transport the sand, and store the electricity for every kilowatt-hour of energy that the plant produced, it would be impossible to argue that an investment in sand energy was anything but a waste of money.

And yet, that is precisely the situation we find ourselves in when the real costs of various green energy sources are calculated. The key to this insight is a metric called EROEI (energy returned on energy invested). Ecologist Charles Hall initially developed the concept as a way to study ecosystems. He realized that a predator only achieves a net gain in energy if it burns less energy in chasing the prey than it gains by eating the prey. In 1981, Hall suggested that policymakers should apply the EROEI concept to assess mankind’s processes for producing energy, but the idea has largely been ignored for the past few decades.1

Recently, however, researchers have conducted studies that allow us to evaluate the energy returned on energy invested for various sources. Using this approach, an energy source would “break even” at an EROEI of 1—that is, it would take just as much energy to create the energy as it produced.

Clearly, a break-even energy source is not worth the effort or cost. Instead, an energy source must produce a surplus in order to power an advanced society. According to a research paper published by an international team of physicists led by D. Weißbach of Germany, the minimum viable EROEI is 7.2

Fossil fuel sources of energy yield an EROEI of about 30, which explains why global GDP has soared over the past century and why standards of living continue to improve throughout the world. However, according to the study, the EROEI of biomass is only 3.9, and for solar photovoltaic it is 3.5, which are both well below the threshold.

Meanwhile, the EROEI of 19 for solar thermal power, and 16 for wind, would seem to indicate that those are viable energy sources. But these values are for energy that is delivered directly from the source to the application...